Very few things in life are more stressful than home construction or remodeling. Everyone has heard contractor horror stories – delays, poor workmanship, unexplained costs. Unfortunately, there is no “homeowners bill-of-rights” when it comes to contractors. Therefore, consumers have to trust their friends and trust their gut when it comes to choosing a builder.
Many people have buyer’s remorse after it is too late to stop a project. So what are the appropriate questions you should ask a potential contractor? How do you do due-diligence to ensure that the people that will be in your home and in your face for the next several months are a good fit for your project and your life?
Here are a few suggestions you may want to follow before you begin the building adventure of a lifetime:
Have the contractor on-board early in the process:
All facets of a complex project tend to become even more involved once construction begins. Get your contractor assigned to the team early enough so they become an integral part of the process, and to reduce the number of surprises after construction begins. Budgeting at various stages of preconstruction with common-sense building strategies can assure that you are getting what you want without compromising later.
How do I research and select the contractor that is right for my project?
Finding a contractor is preliminary to selecting a contractor but an important step in the process. Assembling that list of contractors to discuss a potential union requires some research. Investigate sites on-line such as Yelp or Angie’s List, call on friends or neighbors that have done recent building and consult with your design team on possible contractors. All the while, focus on referrals that have done projects of similar size and complexity. The style of the home is of less consequence than difficulty and quality level.
Once you have some or one potential contractor, move along to the interview process to see if there is a fit. Topics to consider:
References, References, References:
When discussing your project with potential contractors be sure to collect a list of references with whom you will be able to call and discuss qualifications. Most clients of large, estate-type homes may not allow contractors to show their homes to potential clients and that is understandable. However, they or their representatives will likely easily discuss the experience they had with you over the phone. It is important once again to gauge the size and complexity of the project in order to compare the experience that the reference had with the experience you are expecting.
Consider LOCAL experience:
In places like San Francisco, where neighbor input, view obstruction and permitting issues often become hair-raising, having a builder on board who has experience in the City can make a big difference. Other municipalities may not have such constraints but using a contractor that operates in your general area will assure that he knows the pool of local subcontractors and is familiar with the construction norms of that area.
Company longevity is important:
A contractor who has been through various building cycles can be a better predictor of outcomes. Having some time in a referral-based business means loads of feedback from existing clients on how their design decisions have panned out and how products have fared. In addition, most tenured building executives have built several homes for themselves or done some speculative building so have the ability to look at things from an owner’s perspective.
Project and Field Management:
Let’s face it, no matter who you contract with, you need to know who is actually building or remodeling your home? The management team is the single most important facet of what your contractor is offering. This team will be the driver of Quality Control, Schedule and Cost Management. When interviewing your potential contractor, ask about the project manager and/or field superintendent that will be slated to run your project. What qualifications do they possess? How long have they been with the company? Will they be running more than one project at a time? Once the contractor has been selected and the preconstruction phase is underway, it is important to meet and establish rapport with this team. The relationship is priceless.
Who takes ultimate responsibility?
A valuable contractor will generally be performing multiple projects at all times. Each project, large and small, should have a management team in place whether full or part time depending on size and complexity. That team answers to the owner of the company or in larger firms, an operations manager. This manager takes ultimate responsibility within the firm based on the terms of the contract and should act as an advocate for the client when assessing the interim health of the project or as hard decisions arise. By avoiding contractors where the owner or operations manager is also the project manager you ensure a healthier chain of command and a single point of reference for managing expectations.
Insurance & Indemnity
From a legal point of view, construction liability boils down to two issues: insurance and indemnity.
The contractor must be fully insured with a top-rated liability insurance carrier, and name the company owner as additional insured. A proper indemnity clause guarantees that the contractor will compensate for any damage or loss sustained. Make sure that these two critical issues are understood by your contractor and a part of any agreement.
Contract Types
There are many deviations to two standard contract types; Fixed Price and Cost Plus.
A Fixed Price contract is commonly used by owners attempting to lock in a low price. Pitfalls with this arrangement are numerous. Contract documents need to be complete and understood thoroughly by the Owner. Markups are generally hidden making comparisons difficult. Fixed Price contracts generally assure an adversarial relationship between Owner and Contractor going forward.
Cost Plus contracts with negotiated terms lend to a team approach to building. Your contractor should be a service provider making firm deals with subcontractors, suppliers and labor while coordinating all facets into a finished product. Paying a percentage fee for this service and insisting on complete transparency into the process including auditing the books upon completion will ensure you get what you pay for. For a Cost Plus contract to work, you need an experienced, reputable contractor; (Remember those references?)
Understanding of Budget vs. Quality vs. Schedule
It is fairly cliché in the industry but having a firm grasp on the basic construction triangle is a key to understanding how the process works. The triangle consists of budget, quality and schedule. If a low budget is the priority, top quality and a fast-paced schedule may have to be sacrificed to an extent. Conversely, if top quality or unusual finishes are of utmost importance, the budget and/or schedule will need to be extended. Any number of combinations can occur, all causing the push and pull of the triangle. Understanding these relationships and better yet, feeling confident that your contractor understands these relationships help a great deal in fulfilling your wants and needs in a newly constructed home.
